§ The Chancellor of the Exchequer (Mr. James Callaghan)
There is good reason to believe that the charge on imports will yield a substantial saving on our imports bill approaching £300 million a year. But this, of course, is not in itself a cure: it gives us a breathing space—and that alone—so that we can begin the redirection of our economic efforts towards a very substantial increase in exports. The first urgent task is to discover what were the obstacles to higher exports during the last nine or ten months, particularly in the engineering industries, and what were the reasons which made the actual course of exports this year so different from the forecasts made at the beginning of the year. In addition, there will be an intensive examination of ways and means to provide further encouragement 1029 to exporters. My right hon. Friend the President of the Board of Trade will have more to say about this tomorrow if he catches your eye, Dr. King.
In the meantime, we have taken steps to relieve exporters of certain handicaps in the form of indirect taxes which have so far fallen on export costs as well as home sales. The duties are those on petrol and other oils, on vehicle licence duties, and some items of Purchase Tax which, at various stages, enter into the cost of manufacture for export. The legislation which I now propose will operate effectively from 26th October last. The rebate, as has been said, will probably vary from 1 to 3 per cent. of the value of exports according to the type of product. The estimated cost at the present level of exports is £70 million.
This is a substantial help to our exporters. This view is confirmed by conversations I have had with some of our leading exporters. It is plainly a measure which will take time to show its effects, but we hope that the expansion in exports induced by the rebate will eventually be a good deal greater than the budgetary cost.
There are various ways in which the rebate will help exporters. It will enable firms to keep their prices competitive; to devote more effort to the marketing of their goods abroad; and to devote larger resources to keeping their products fully adapted to the requirements of overseas customers. Finally, it will help to increase the profitability of exporting, so encouraging industrialists and traders to put more of their resources and efforts into the export side of their business. The intention will be defeated if firms merely pocket their rebates and make no effort to expand their sales abroad. If, as I hope, this rebate leads to a significant increase in exports it will have done good out of proportion to the money involved, and I shall not grudge the revenue forgone.